Fortune Reit distribution income up 3% in 2007

FORTUNE Real Estate Investment Trust has announced distribution income of HK$284.8 million (S$51.8 million) for 2007, up 3 per cent from 2006.

Distribution per unit for the year ended Dec 31 edged up 2.5 per cent to HK$0.3512.

‘We are pleased that Fortune Reit’s portfolio of 11 retail malls delivered stable and sustainable growth for FY07,’ said Stephen Chu, chief executive of the Hong Kong-based Reit’s manager, ARA Asset Management.

‘This was driven by strong rental reversions of about 15.6 per cent for the whole year on a portfolio basis. Our pro-active asset management strategies, coupled with exciting promotional events in the malls, have contributed to healthy demand from tenants and shoppers.’

Fortune said that as of end-2007 its tax-exempt yield was 6.7 per cent, up from 5.8 per cent a year earlier. Strong rental reversions were driven by its Waldorf Garden Property, which was enhanced in August.

The average rental rate of the entire portfolio was 6.3 per cent higher at HK$25.23 psf at Dec 31, 2007, versus HK$23.74 psf a year earlier. Approximately 45 per cent of leases in the portfolio expire this year, creating a good opportunity for organic growth in a strong retail market, Fortune said.

Fortune Reit H1 profit rises 1.5% to HK$143.3m

FORTUNE Real Estate Investment Trust has reported a net profit – income available for distribution – of HK$143.3 million (S$27.7 million) for the first half of 2007, up 1.5 per cent from a year ago.

Total revenue for the Reit, which holds 11 retail malls in Hong Kong, was down slightly by 0.8 per cent due to vacancies arising from repositioning and asset enhancement initiatives at some of its malls.

The Reit, which is partly owned by Li Ka-Shing’s Hong Kong flagship Cheung Kong Holdings and listed on the Singapore Exchange (SGX) mainboard, has not made any acquisitions since 2005.

Justin Chiu, chairman of ARA Asset Management, which manages the Reit, said, however, that due to the ‘stabilisation of the interest rate environment’, it could now be looking to acquire more properties.

‘We are looking at opportunities in China, but looking at it cautiously,’ he said, adding that ARA was also looking at properties in Hong Kong, and that Cheung Kong has, ‘a lot of properties’.

Fortune Reit has not revealed a target portfolio size. Mr Chiu said: ‘We don’t want to limit ourselves.’

Fortune Reit currently has a gearing ratio of 24.6 per cent. Based on the 35 per cent cap for Reits that are not rated, it estimates that it has a further debt flexibility of about HK$1.5 billion.

Mr Chiu also emphasised that Fortune Reit could raise its gearing to 60 per cent to fund future acquisitions if required. He said the Reit might seek a rating, depending on the size of possible acquisitions. ‘It only takes about a month to get a rating,’ he added.

The portfolio’s base rent also increased by 4.8 per cent to HK$24.54 psf on a year-on-year basis.

Fortune Reit reported yesterday that its annualised tax exempt yield was 5.4 per cent based on the closing unit price of HK$6.60 as at June 29. At the close of trading yesterday, Fortune Reit ended at HK$6.25 per unit, up five cents.

Rental reversion for renewals in H1 was 11 per cent. The better performing malls such as Ma On Shan Plaza, Waldorf Garden Property and City One Shatin Property registered rental reversions of 40 per cent, 18.7 per cent and 11.4 per cent respectively.

Distribution Per Unit Improved To 17.70 HK cents

Attractive Tax Exempt Yield Of 5.4%

31 July 2007. ARA Asset Management (Singapore) Limited (“ARASL”), as manager of Fortune Real Estate Investment Trust (“Fortune REIT”), is pleased to announce the results for Fortune REIT for the half year ended 30 June 2007 (“1H07”).

“We are pleased to continue to deliver stable returns and growth to our Unitholders. The net property income (“NPI”) for the quarter ended 30 June 2007 and 1H07 grew by 3.0% and 2.6% year on year (“Y-o-Y”). Correspondingly, the income available for distribution for 1H07 improved to HK$143 mil with a distribution per Unit (“DPU”) of 17.70 HK cents, reflecting an attractive tax exempt yield of 5.4%1 to Unitholders. In the reporting period, the portfolio of assets has also performed admirably with healthy rental reversion of 11% for 1H07. We are glad that ongoing asset enhancement initiatives in Waldorf Garden Property is on target as more than 80% of the enhanced space has been pre-committed at rents which are about 3 times over preceding rents. We believe Fortune REIT’s strong asset and financial performance has been driven by buoyant economic conditions, real wage growth, record low levels of unemployment and positive local consumption demand. We are optimistic that Hong Kong’s retail sector will continue to benefit from sustainable economic growth and positive social sentiments for the remainder of 2007.” Sam Wu, Chief Executive Officer of ARASL commented.


Source : SGX